Unleash the value of consumer data

Companies' rapidly growing ability to capture, mine and analyse consumer information – from
legacy databases, smartphones, social networks and a host of other sources – has the potential to
deliver vast economic and social value.

Businesses stand to gain a host of critical advantages from this expanding use of consumer
information. These include new or enhanced abilities to tailor, personalise and target products and
services, respond quickly to challenges, and achieve new operating efficiencies.

Individuals stand to be major beneficiaries as well, as they draw increasing value from the many
internet services – such as search engines, email, news sites and social network services – that
have been built atop the sharing of their personal data. Recent BCG research reveals that the
average US household receives an annual benefit of approximately $970 from digital services, for
instance.

But much of this potential value will fail to materialise if consumers or regulators act to
restrict the flow of personal data. And that seems an increasingly real prospect, given the growing
frequency of headlines reporting security breaches and data misuse. The evolving, sometimes
controversial and geographically inconsistent regulatory environment only adds to consumers'
reasons for pause.

Greater trust translates into permission to use data in more
ways and is likely to be a key source of competitive advantage in the future

The challenges associated with doing so will not be not equal, and The Boston Consulting Group
research
indicates that trust varies widely across industries. Organisations within the automotive,
telecommunications and retail industries, for example, are five to 10 times more trusted by
consumers than online search and social networking.

Yet no organisation, even the most trusted, can afford to sit idle, since there is ample scope
for nearly all to improve on the trust-building front. Greater trust translates into permission to
use data in more ways and is likely to be a key source of competitive advantage in the future.

Building and maintaining a company's "trust footprint”– the set of data uses that consumers are
willing to allow the company to engage in – will require significant changes within an
organisation.

To start, organisations will need to develop clear, transparent codes of conduct that define how
they will (and won't) use consumer data, and the related steps they will take to inform consumers
of new potential uses. Few organisations, today, have done this.

Next, organisations will need to share these codes of conduct with consumers and keep consumers
informed regarding compliance. Few consumers understand the conditions around which their data will
be used, shared and protected, and this understanding is key to establishing and enhancing
trust.

Finally, organisations will need to develop the capabilities that allow them to follow their own
policies. Few organisations today are set up to be able to monitor, let alone consistently
control, their use
of consumer data within and across operating units and geographies. But without these
capabilities, an organisation’s consumer data plans and ambitions may amount to little.

One financial services provider we know of is a case in point. The institution is developing an
integrated approach to managing consumer data. Yet the company's multiple business lines are fully
siloed, with no current capability to ensure consistent execution across them. This creates the
real risk of missteps and related loss of consumer trust.

For more on the business use of consumer data

The role of IT

To succeed in this new arena, companies will need to build new business capabilities and
fundamentally rethink their operating models. IT will be a key point of focus, as IT capabilities
will underpin or, more likely, drive most of the required business capabilities. Hence optimised IT
is critical. IT organisations that can step up their game and deliver stand to bring tangible
competitive advantage to their companies.

The CIO has a particularly important role to play. In addition to assuring that the IT function
is firing on all cylinders, the CIO should actively take a leadership role in steering the company
through the transformation, given their unique role and cross-organisational perspective.

CIOs should work closely with the business leadership, as a true partner, to help determine what
is required – including the new processes, metrics and tools – and how best to get there.

The data
revolution stands to be truly transformational. But it will deliver a fraction of its potential
if companies fail to master the operational challenges. The CIO and the IT organisation have a
strategic choice to make: be reactive (and part of the problem) or take a leadership role and drive
transformational change across the company.

John Rose (pictured above) and Ralf Dreischmeier (pictured below) are senior partners and
managing directors of The Boston Consulting Group

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